Procurement Bill [HL]

Lord Wallace of Saltaire Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am very glad to follow the noble Lord, Lord Stevens. He very helpfully reminded us that we might legislate but it is the Government’s job to execute. The ability with which the execution of policy is carried out is a fundamental part of this. I might also say that, as the noble Lord unfortunately discovered in the particular respect he mentioned, we can legislate but if we leave loopholes we allow the Government to drive coaches and horses through them from time to time. That is why we sometimes have to look very hard at Bills to make sure they very clearly express Parliament’s intentions. Important and detailed as this Bill is—the way my noble friend Lord True very clearly set out the Bill’s intentions was most helpful —as the noble Baroness, Lady Hayman, said, we want constructively now to engage with that and to seek to improve the Bill before we send it to the other place.

In terms of interests, I am a director and adviser to LOW Associates, which is a beneficiary of procurement contracts with the European Union. I have looked quite carefully: we have a number of contracts with the European Commission and we advise on European procurement. Although that gives me experience in this respect, I do not think it gives rise to any direct conflict of interest—but I make the declaration in case anybody wants to check it out.

The noble Lord, Lord Stevens, is absolutely right. Where the NHS is concerned, “light touch” should not mean without proper transparency, processes and the ability to understand what is being bought and why. Indeed, there has been some activity in the NHS that should be paralleled across government. Procurement is increasingly seen as an essential part of the quality of management. That is happening through things such as Getting It Right First Time and the benefit of the report from the noble Lord, Lord Carter of Coles, on procurement in the NHS, which included building a procurement profession inside the NHS, which hardly existed. Right across government, we need chief procurement officers to be seen as often as important as chief financial officers in getting the quality of service and value right.

Because this is Second Reading and time is necessarily short, I will mention just two things—there will be further detail on the Bill—that I want to raise in this debate and that I hope to follow up in Committee and on Report. The Chancellor the Exchequer, in his Spring Statement in March, said that

“over the last 50 years, innovation drove around half the UK’s productivity growth, but since the financial crisis, the rate of increase has slowed more than in other countries. Our lower rate of innovation explains almost all our productivity gap with the United States.”—[Official Report, Commons, 23/3/22; col. 341.]

It is clear from the research that innovation and procurement are intimately related in an economy. Procurement, as a mechanism for fostering innovation in an economy, is probably more important than the grant-led systems that we often focus on. We often operate on the supply side, saying, “We must have more scientists, start-ups and grants for innovation”, but actually we need to remember that the demand side may have at least equal impact, because demand pulls through innovation. The home market—the UK market—in particular can be of additional and significant importance to innovative suppliers, enabling them to establish and bring forward innovation in an economy. Innovation needs to be an essential part of our procurement process.

I acknowledge that the objective of procurement is not innovation but to secure quality and value in public services and to do so in a transparent and fair way. But the consequences of procurement to society are terrifically important. What the noble Baroness and the noble Lord, Lord Fox, were saying about social value is terrifically important. We should acknowledge and understand the externalities of procurement, and, through the legislation, we should tell the public contracting authorities that they should take account of them. There was an interesting exchange on this.

The Government’s national procurement policy statement, published in June 2021, acknowledged that the national priority is social value. In that context, “social value” was defined as

“new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience.”

This relates to the point that the noble Lord, Lord Stevens, was making, and to my own point about innovation. These things are all in there, but they are not in the Bill, because the day after the Bill comes into force, the Government could write a new national procurement policy statement.

My initial submission at Second Reading is that government should be very clear that the procurement objectives include not only public benefit but social value, and the latter must be defined in the national procurement policy statement in the ways that we specify in the Bill. I hope to include all those points, including the issues relating to climate change, supply chain resilience and the importance, from my point of view, of procurement-led innovation in the economy.

I will make one other point about treaty state suppliers—this is not the point that was previously made. The International Agreements Committee, of which I am a member, is scrutinising the Australia and New Zealand free trade agreements, which are the first of their kind. The Trade (Australia and New Zealand) Bill has been introduced in the other place, and the purpose of this legislation will be to repeal that when the time comes. So, at the same moment, we have a Bill at each end, with one repealing the other—why is that the case? Looking at the Explanatory Notes to the Bill in the other place, I see that it is clearly because the Government expect that Bill to pass rapidly and this one to pass slowly. Therefore, the consequence is that they need that legislation quickly but will subsequently repeal it using this legislation. This is the way that such legislative matters proceed.

My problem is that Schedule 12 to this Bill simply repeals that legislation. So, if we were to amend the Trade (Australia and New Zealand) Bill at any point in the future, it could—or, in fact, would—be repealed by government by virtue of Schedule 12, so any debate on the Trade (Australia and New Zealand) Bill is pointless. I hope that we make sure that that does not happen. We must therefore have a serious debate about whether we are happy for future free trade agreements with procurement chapters to be implemented solely by secondary, rather than primary, legislation. We had this debate on the Trade Act, and I think that we will need to come back to it.

Overall, this is an important Bill, very well introduced by my noble friend—

[Lord Wallace of Saltaire (LD)]

There are only 11 schedules to my copy of the Bill.

[Lord Lansley (Con)]

Forgive me—it was actually added to Schedule 9. But I am referring to paragraph 3 in Schedule 11, on repeals. None the less, I welcome the Bill and look forward to our debates on it.

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[Lord Wallace of Saltaire (LD)]

My Lords, the noble Lord, Lord Maude, remarked that this is a dull subject and implied that we are all rather nerdish to be here. It has been, I think, a constructively nerdish debate. I admit that I have learned quite a lot about the problems of public procurement from working with the noble Lord, Lord Maude. I disagreed strongly with some of his ideas, but I agreed very strongly with some of them as well. I also shared his frustration that some of his best ideas were blocked by the departmentalism of Whitehall and the argument that each department made, as others do, of “We’re different from the others —besides, I’m the Accountable Officer to Parliament”, and that a number of opportunities for reasonable reform were therefore missed. Procurement is a very dull subject most of the time, but one punctuated by scandals when they hit the Daily Mail.

As a revising Chamber, if we are able to work together, our aim in this Bill should be to provide a framework which can outlast the present Government and to provide a stable, long-term environment for contracting between different parts of government and outside suppliers. The Minister will recognise that I say that with particular passion, having survived the Elections Act, as it now is, which was a deeply partisan and deeply unsatisfactory Bill which will have to be rewritten by whichever party comes into office after the next election. Let us do this one differently, please.

There is an awful lot of windy Brexiteer rhetoric about “taking back control” and replacing

“the current bureaucratic and process-driven EU regime for public procurement”—

but here we have an unavoidably bureaucratic and process-driven Bill to replace the EU regime. The Bill does not entirely “take back control” because, as we will have to discuss, the UK will still be governed by various international standards and limited by the commitments given in the various trade agreements we are signing with other countries.

What we must focus on is getting the framework and the requisite elements of parliamentary oversight right. I think we all recognise that we cannot do much more than that. The problems of implementation cannot be dealt with very easily in law. The training of national and local civil servants to manage procurement is clearly very important; outside the Bill, I would like to ask the Minister whether we can have some more information about what sort of training is being laid on to improve the quality of procurement at all levels.

There is clearly an excessively complicated contracts process which enables outsourcing companies like Serco and Capita, and the sad Carillion, to write contracts which they therefore win but which they do not actually execute quite as well as others might have done. We are dependent on the success of the digital platform, which we will have to discuss, but its actual execution is clearly out of the hands of anyone in this Chamber, although the noble Lord, Lord Clement-Jones, on our Benches, will want to discuss that a little more.

On parliamentary oversight, there is some very imprecise language, as always, in this Bill: “an appropriate authority” may do this, that and the other. Every time I read that, I thought of the noble Lord, Lord Hodgson, and his committee, and how much he will pounce on the idea that tertiary legislation will be provided by some sort of authority somewhere around or near Whitehall. Clause 12, on the national procurement policy statement, which we have discussed in some detail, states that

“a Minister … must … carry out such consultation as the Minister considers appropriate”

and the statement can be amended or replaced whenever a Minister considers it necessary. Since 2015, Ministers have changed, on average, every 15 months. We have had five or six Cabinet Ministers in various offices since 2015. That is an appalling rate of turnover. It also means that continuity is very hard to get and that parliamentary oversight questioning a Minister, asking why he or she wants to change the policy statement or whatever it may be, is an important part of trying to maintain continuity. We all know that in many areas of procurement, continuity and a long-term perspective are extremely important.

Many of the most attractive reforming ideas in the Green Paper, Transforming Public Procurement, appear only weakly in the Bill. The Green Paper proposes, for example,

“a new flexible procedure that gives buyers freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors”,

but the charity and social enterprise sectors have almost entirely disappeared from the Bill. The Minister’s letter at the time of First Reading stated that the reforms to the procurement regime would be based on value for money, competition and objective criteria in decision-making, whatever those objective criteria may be. The briefing on Bills in the Queen’s Speech goes further, claiming that the Bill enshrines the principles of public procurement, with value for money first and foremost. We have heard from others in this debate that even the concept of value for money depends on whether you are saying value of money over one year, over five years or, as the manager of Crossrail said on television yesterday, over 60 years. It changes your calculations considerably. However, Clause 11 balances all this by adding as an objective “maximising public benefit”, and Clause 18 refers to the “most advantageous tender”, deliberately changed from previously, when it was the “most economically advantageous tender”—again without spelling out what criteria should come into play.

We will wish to put back in the Bill the language of the Green Paper, which states, for example, in paragraph 89:

“A more sophisticated understanding of different types of value—including social value … wider public policy delivery and whole-life value”


and refers in paragraph 100 to delivering

“greater value through a contract in broader qualitative (including social and environmental) terms”.

In paragraph 39, the Green Paper calls for

“a proportionate delivery model assessment before deciding whether to outsource, insource or re-procure a service thorough evidenced based analysis”.

That is wonderful but, again, why is not the option of insourcing confirmed in the Bill? We are all aware of the failure of water privatisation, for example, to deliver the promise that it would bring a surge of additional investment into the sector to clean up England’s rivers and coastlines. It did not lead to that; it generated high profits for its investors instead.

The Bill is very soft on private utilities, in view of their very mixed record in several sectors. It aims, as Minister told us, to reduce the regulatory burden on private utilities and to reduce transparency requirements to “the minimum required” by international trade agreements. The Bill contains a mechanism to exempt utilities in some sectors, such as ports, from procurement regulation. Even Dominic Raab has now discovered that ports are an important part of our national resilience and security structure. I am therefore not sure that exempting them from that level of supervision is desirable.

The Minister is a good populist. I draw his attention to the Survation poll of voters in the red wall seats captured by the Conservatives in 2019, which showed an overwhelming preference for some form of public ownership and management of water, energy supply, public transport, health and social care services. The Government are not giving their voters what they want.

The case for not automatically assuming that private service companies will provide the best outcome is strongest in the provision of personal services and social care, as the MacAlister report has just shown. The report states bluntly:

“Providing care for children should not be based on profit.”


The horrifying stories in today’s Times about the excessive profits made by convicted criminals through managing social care for children reinforce all of that case. Local authorities may often be the most appropriate provider. One of the most absurd and damaging central government decisions on outsourcing was, at the beginning of the pandemic, to put out the test and trace scheme to two large service companies, one of them based in Florida, which had no idea of local geography or conditions, when local public health officers already had the knowledge and contacts to provide a faster and more effective response. The Minister has a distinguished record in local government. I am sure that he does not share the view of some of his ministerial colleagues that central government should always have the main control of everything that goes on.

Briefings on the Bill all refer to ensuring “greater transparency of data”. We have all learned to be sceptical of government promises of transparency, freedom of information, and so on. Here, too, we shall want to ensure that there is active parliamentary oversight.

The briefings we have received from the Local Government Association and the National Council for Voluntary Organisations contain a number of reasoned criticisms and proposals for amendments which I hope the Government will accept to improve the Bill. I particularly noted the NCVO’s reference to the role that some strategic suppliers play in adding SMEs and charities to their promised supply chains but then not following through by giving them contracts—using charities and SMEs as “bid candy”, as I gather is the phrase. A more critical approach to companies that are skilled in drafting sophisticated contracts but not good at delivery is clearly needed but, again, that is more a matter of changing the negotiation of contracts and improving monitoring than of drafting in the Bill.

There are issues of corruption and of preventing undue political influence, which are touched on in Part 5—Clauses 74 to 76—which we will also need to discuss, despite the remarks of the noble Lord, Lord Moylan. I am not entirely sure that I yet understand the concept of dynamic markets, and I should welcome a further briefing on that.

I end where I began: I hope that, as a group of nerds, we can agree to a considerable degree on what needs to be done, that we can manage to put into the Bill a coherent framework for the future of public procurement, and that the Minister will co-operate with us—I thank him very much for the briefings we have already had and look forward to more—in achieving that objective.

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[Lord True (Con)]

I will indeed write a letter. It is very helpful to have my noble friend write my speeches for me.

I will answer other points but, to conclude, I thank noble Lords for their extremely intelligent, thoughtful and well-considered remarks, which the Government will consider in Committee. Our proposals have been consulted on extensively and we believe that they are common sense, but we can always gain from listening to your Lordships. In that spirit, I hope that your Lordships will support these proposals as they progress through the House.

[Lord Wallace of Saltaire (LD)]

I do not want to detain the House, but, since my noble friend Lord Strasburger made some serious points about a major contract, could the Minister possibly say that he will undertake to meet him and others to respond to some of the points he made?

[Lord True (Con)]

The noble Lord made a speech that went wide of the Bill. I will look at what he said in Hansard and respond thereafter. I make no commitment at this point.